Meggitt produced half-year results slightly in advance of consensus estimates, as revenues from the engineering group's military and energy segments rose by 10 and 30 per cent, respectively. Management's "ongoing confidence" prompted a significantly higher payout to shareholders, while an 8 per cent hike in the order book year-on-year enabled chief executive Terry Twigger to reiterate a double-digit revenue growth forecast for the full year.
Excluding last year's acquisition of PacSci, Meggitt's turnover increased by a creditable 8 per cent, which was above the group's medium-term target range of 6-7 per cent. On an underlying basis, and including the six-month PacSci contribution, total operating profits rose 13 per cent £185m, although margins declined by 130 basis point to 23.9 per cent.
Operating cash flow of £161m accounted for 87 per cent of underlying profits and helped keep Meggitt's finances in good shape, as evidenced by an improvement in the net debt to cash profits ratio and an increase in interest cover. These are both key covenants in a $400m (£256m) syndicated bank facility negotiated post period-end.
Investec expects adjusted full-year EPS of 35.2p (31.6p in 2011), rising to 38.6p in 2013 assuming sales growth of 6 per cent.
| MEGGITT (MGGT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 402p | MARKET VALUE: | £3.1bn | |
| TOUCH: | 401-402p | 12-MONTH HIGH: | 416p | LOW: 300p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 235p* | NET DEBT: | 43% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 650 | 112 | 11.7 | 3.2 |
| 2012 | 776 | 127 | 13.2 | 3.6 |
| % change | +19 | +13 | +13 | +13 |
Ex-div: 15 Aug Payment: 5 Oct *Includes intangible assets of £1.53bn, or 196p a share | ||||
